Study: Insurer competition holds steady on state exchanges in 2016

Health insurer participation in state-based marketplaces has remained stable in 2016, in part because some states have encouraged competition by establishing marketplace participation rules, according to a new analysis from The Commonwealth Fund.

Even though consumer operated and oriented plans (CO-OPs) have struggled this year and there have been persistent market challenges, an analysis of the 17 state-based marketplaces found that most state-based marketplaces have an equal or greater number of insurers competing for business this year. California and Kentucky are adding at least one national insurer that existed prior to the Affordable Care Act, and nearly every insurer that entered state-based marketplaces in 2015 is continuing to participate in 2016.

Only five states recorded a loss in 2015, and three of them attribute that loss to the closing of the states' CO-OPs, the analysis adds.

State marketplaces also have established regulations that were designed to create competition and encourage participation, the analysis states. For example, Maryland prohibits most insurers from offering products outside of the individual market unless they also participate in the ACA marketplace. Additionally, each state is trying to find a balance between creating a sustainable marketplace and providing a competitive network with different benefit designs.

The results of the analysis make it clear that "marketplaces, state and federal alike, have flexibility to explore a range of approaches to test what works for consumer," according to The Commonwealth Fund. Leading up to the current open enrollment period, some insurers said they expected to see a spike in consumer competition as members search for plans that best fit them financially.

Yet there are also signs of trouble on the exchanges. For example, UnitedHealth is currently re-evaluating its participation in the individual market because of mounting financial losses.